wage differentials

Question 1

what are 5 things that tell us the labour market is imperfect

Answer 1

labour isnt homogenous
non- monetary considerations
labour noy perf mobile
trade unions and supply restrictions
monopsonies and wage setting abilities

Question 2

what is a segmented labour market

Answer 2

there are many separate labour markets (sub-markets) rather than just one e.g. the market for doctors, bakers or teachers. In practice there may be many barriers to entering a particular occupation.

Question 3

why can wage differentials exist in non competing groups

Answer 3

Wage differentials exist in non-competing groups because people in different groups cannot easily move between jobs.
workers who, for various reasons like skills, do not directly compete with each other for the same jobs- and this separation helps explain differences in wages between them.
The idea is that not all workers are substitutes

Question 4

whats the conseuquence of innate human differences

Answer 4

Some people are more academically intelligent, some have exceptional practical (manual) skills, and some are athletic e.g brain surgeon, Premier League footballer
It is not enough just to have a rare skill the skill must be rare in supply in relation to the demand for it.

Question 5

how does this link to non competing groups

Answer 5

Such non-competing groups are assumed to supply their labour in segmented labour markets which are separated by overwhelming barriers caused by innate human differences.

Question 6

what are some barriers preventing workers from moving into different professions

Answer 6

discrimination
unpleasant working conditions
dangerous job
geographical mobility
skills and experience
qualifications
imperfect information

Question 7

examples (general for understanding of wage differentials)

Answer 7

Occupations e.g sales assistants and architects
Industries e.g medicine and hairdressing
Firms e.g Lidl and Asda
Regions e.g NE of England and SE of England

Question 8

what are demand factors affecting WD

Answer 8

The level of MRP e.g fooballers way higher MRP as they bring tv media to club, merch selling etc
The wage elasticity of demand for labour e.g footballers very unique skills/ not replaceable with elasticity of around -0.3 to -0.1

Question 9

what are supply factors affecting WD

Answer 9

The availability (supply) of labour
The wage elasticity of supply of labour (PL players very inelastic so very low due to extremely high barriers to entry)
The level of human capital required